European Regulatory Framework for Money Market Funds
Date
Authors
Advisors
Journal Title
Journal ISSN
ISSN
Volume Title
Publisher
Type
Peer reviewed
Abstract
Money market funds are widely used by all types of investors, including households, corporate treasurers, pension funds, or insurance companies, who regard money market funds as a ‘safe’ short-term liquid asset class for investing cash. In this case they are proxies to cash deposits. Money market funds are themselves key lenders to issuers of short dated high quality money market instruments. They provide an important source of funding for a variety of institutions such as sovereigns, banks, and companies. Active trading by money market funds is vital to the liquidity of various high-quality markets for commercial paper, short-term bank debt, and sovereign debt. Increased liquidity is, in turn, beneficial to market efficiency and leads to a reduction in the cost of capital for businesses.